What are the benefits of analyzing Jatropha activities as a commoditization process?

By Jacqueline Vel

Quote: “Reflecting on this experience, this article concludes that future policies can be improved by (….) addressing difficulties in the commoditization process”

In the research program JARAK, activities in the emerging jatropha sector have been studied as part of the “commoditization of an alternative biofuel crop.” That approach implies that the research did not focus on “commodities” as just the material products of this sector, comprising jatropha seeds, crude jatropha oil and biodiesel. Instead, the concept of commoditization emphasizes the social and political processes leading to the eventual production of these end products. The global attention for jatropha as a biofuel crop that would be a socially and environmentally sustainable alternative to oil palm for producing biodiesel has linked the production of jatropha seeds in Indonesian fields to global markets. With a commoditization process approach JARAK researchers have studied how these links have been established, and who and what have been the driving actors and factors involved.

 With this analytical approach we use an interpretation of “commodity” that differs from how economists or management scientists understand the term. In their publications, “commodity” refers to a basic good in commerce that is interchangeable with other goods of the same type; commodities are most often used as inputs in the production of other goods or services, and their quality is essentially uniform across producers. Examples are wheat, crude oil and gold (1). In the JARAK program, we have adopted a social-science approach to commoditization. At its most basic level, the process of commoditization adds exchange value to objects that normally possess solely “use value” (2, p. 68). When an object has exchange value, it can be traded for money and exchanged with objects of seemingly dissimilar use values. When jatropha was still just a wild plant with oily seeds, it had some use value for villagers, who would make simple candles with the seeds’ oil, or use parts of the plant as medicine. What made jatropha into a commodity was production for sale on the market (3, p. 2). Jatropha is, or can be imagined as, a commodity with a market price so that transactions can take place between people transferring  jatropha products to one another. Following the critical social- science debates about agrarian change, “commoditization” indicates the socio-political process of linking rural household producers with capitalist production in various ways (4 5,). Building on that notion of the concept, jatropha commoditization  refers to a phased process in which a variety of actors has been transforming jatropha from a wild shrub into a global modern biofuel commodity with valuable side products.

The first benefit of taking a process approach is that it opens the mind to observing how actors have created various commodities from the jatropha plant. Collaboration with process technologists working on biorefinery inspired us as social scientists to identify a variety of jatropha products. The seeds of the jatropha tree gained market value as seed material for agricultural enterprise; the jatropha oil gained value as pure plant oil or biodiesel, or as renewable feedstock for electricity production; press cake was valued as organic fertilizer; and jatropha plantations promised to produce carbon credits. Moreover, jatropha was discovered to be a source of biokerosene (6), and the plans to produce it became valuable content on company websites as evidence of their green corporate strategies.

The products from the jatropha plant do  not only include oil, biodiesel en press cake, but also carbon credits, green website narratives, CSR projects. The prospect of these future products attracts domestic and foreign capital. Slide: Jacquelne Vel 2010.

The products from the jatropha plant are oil, biodiesel and press cake, but also carbon credits, green website narratives, and CSR projects. The prospect of these future products attracts domestic and foreign capital. Slide: Jacquelne Vel 2010.

The prospects of commercialization of the crop also led to market value emerging for scientists and consultants’ knowledge of how to convert jatropha oil to biodiesel; the service of writing business proposals found a market among project developers; the service of providing access to land and labor for establishing jatropha schemes gained market value among aspiring investors. Moreover, it seems that the jatropha-related products and services have been more important, in both volume and value, than the actual amount of plant oil and biodiesel produced by the sector.

The second benefit of using a process approach to understand the commoditization of jatropha is that it creates awareness about how a variety of actors have engaged in producing jatropha-related products and services, regardless of whether their activities would lead to the actual production of seeds, oil or biodiesel. Fieldwork, reports and articles about jatropha schemes indicate a pattern in the crop’s commoditization process that consists of four phases with distinct divisions between the types of work and a different set of actors dominating the activities.

The jatropha commoditization process. Figure: Jacqueline Vel, 2013.

The jatropha commoditization process. Figure: Jacqueline Vel, 2013.

This pattern can be summarized as follows (see also (7)) :

In the first phase of the jatropha commoditization process, the idea of using jatropha as a modern biofuel and the technology to produce it was invented. Scientists disseminated their invention, creating a narrative to explain how it would contribute to solving societal problems. When new technological inventions are published they create business opportunities. Then the products that new technologies promise to produce are transformed into discursive commodities for as long as their high-yielding potential is confined to laboratory situations.

In the second phase, project developers seek economic opportunities to make a profitable combination of the new technologies with the necessary capital, land and labor. They approach scientists, potential investors, and actors who can provide access to land and labor. They write business plans and assign value to “marginal land,” “local labor” and the products from jatropha cultivation and processing: crude jatropha oil, press cake and waste. Jatropha project business plans can be seen as documents for selling discursive commodities to potential investors. In this second phase, the material products linked to discursive commodities are business plans, feasibility studies, risk assessments, land use permits, maps, seminar presentations and demonstration plots.

The third phase of initial (field) implementation activities includes establishing nurseries, building a road and a warehouse, and acquiring machinery for land preparation. Only in this phase does the project become visible to the local population.

The fourth and final phase is when jatropha production is actually taking place at full production scale. In the cases included in the JARAK research, this fourth phase has never been reached. The reasons for this are elaborated on in other parts of this publication, and include the absence of a market for jatropha seeds, the phenomenon of “virtual land grabbing” (8) and the diversity of the short-term interests of the main actors.

As regards the jatropha commoditization process itself, our conclusion is that in Indonesia jatropha development never went beyond the third phase, whereas the explanation for how the sector could thrive for a decade can be found by studying the activities and actors in the second and third phase of the commoditization process.

References

  1.  http://www.investopedia.com/terms/c/commodity.asp.
  2. I. Kopytoff, The cultural biography of things: Commoditization as a process, in A. Appadurai (ed.), The Social Life of Things, pp. 64-91 (Cambridge University Press, Cambridge, UK, 1986).
  3. J. Nevins, N. Lee Peluso, Taking Southeast Asia to Market: Commodities, Nature and People in the Neo-Liberal Age (Cornell University Press, Ithaca, 2008).
  4. P. Vandergeest, Commercialization and commoditization: A dialogue between perspectives. Sociologia Ruralis 28(1), 7-29 (1988).
  5. Jan Douwe van der Ploeg, The peasantries of the twenty-first century: The commoditisation debate revisited. The Journal of Peasant Studies 37(1), 1-30 (2010); DOI:10.1080/03066150903498721.
  6. Friends of the Earth Netherlands, “Agrofuels in planes: Heating the climate at a higher level” (Milieudefensie, Amsterdam, 2012). 
  7. Jacqueline Vel, Trading in Discursive Commodities: Biofuel Brokers’ Roles in Perpetuating the Jatropha Hype in Indonesia, Sustainability 2014, 6(5), 2802-2821; doi:10.3390/su6052802
  8. J. McCarthy, J. Vel, S. Afiff, Trajectories of land acquisition and enclosure: Development schemes, virtual land grabs and green acquisitions in Indonesia’s outer islands. Journal of Peasant Studies 39(2), 521-49 (2012).

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What are the benefits of analyzing Jatropha activities as a commoditization process? by JARAK the short history of Jatropha projects in Indonesia, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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